News

Houston Appeals Court Says Corporate Officer Not Responsible for Debt

July 27, 2015

HOUSTON – The Court of Appeals for the First District of Texas in Houston has found that a Harris County trial court erred by holding a corporate officer responsible for the debts of a failed local spa.

In a July 23 opinion, a three-judge panel from the appeals court found that Francie Willis, a corporate officer of Urban Retreat of Houston Inc., does not have to pay $38,327 for unpaid rent to landlord BPMT, LLC. The appellate panel also found that Ms. Willis is not jointly and severally liable for $20,000 in trial attorneys’ fees or a conditional $45,000 in appellate attorney’s fees.

The appellate court said the issue was whether the debt in question was incurred before or after the Urban Retreat corporation was effectively dissolved when its franchise taxes were not paid. The court found that the debt was incurred when the lease was signed and while the corporate structure was still in place, which exempted a corporate officer such as Ms. Willis from individual liability.

The case is Francie Willis v. BPMT, LLC, No. 01-14-00537-CV. First District Justice Michael Massengale delivered the opinion, which reversed an earlier finding issued by the 164th District Court in Houston.

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